The Australian dollar climbed after a government report showed gross domestic product expanded in the second quarter at a faster pace than economists had estimated. The so-called Aussie snapped a three-day decline against the greenback as Reserve Bank of Australia Governor Glenn Stevens signaled a willingness to keep interest rates on hold. The New Zealand dollar rallied versus the majority of its most- traded peers as Asian equities rose, supporting demand for higher-yielding assets. “The Aussie is holding its gains because the RBA was quite upbeat about the outlook for Australia,”said Annette Beacher, head of Asia-Pacific research at TD Securities. “That has been followed up pretty quickly by strong GDP.” Australia’s currency rose to $1.0590 as of 1:47 p.m. in Sydney from $1.0484 yesterday. It strengthened to 81.76 yen from 81.42. The New Zealand dollar gained 0.6 percent to 82.73 U.S. cents, and traded at 63.86 yen from 63.89. The MSCI Asia Pacific Index of regional shares rose 1.7 percent, reversing yesterday’s 1.5 percent decline. Australia’s gross domestic product expanded 1.2 percent from the first quarter, when it contracted a revised 0.9 percent, the Bureau of Statistics said today. The median estimate of economists surveyed by Bloomberg News was for a 1 percent increase. ‘Steady Settings’ Traders also reduced bets on the prospect of lower central bank interest rates after Stevens indicated the RBA may extend its current pause. Policy makers yesterday held the benchmark rate at 4.75 percent, the highest in the developed world, for a ninth straight meeting. “Periods of sudden increases in anxiety within international financial markets are moments when, if at all possible, it is good to be in a position to be able to maintain steady settings,” Stevens said in Perth today. The yield on December interbank cash-rate futures added 16 basis points to 4.10 percent on the Sydney Futures Exchange today. Australia’s three-year bond yields climbed 16 basis points, or 0.16 percentage point, to 3.77 percent today. Ten-year yields increased 12 basis points to 4.33 percent. To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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